The blocks would happen farther apart, but it would also mean that the remaining miners would have much higher change of actually finding a block, since there would be less competition. Also as there would be the same amount of transactions and less blocks, the blocks would have more collected transaction fees -> bigger reward. Also probably people/exchanges would increase the fees since competition would be bigger to get the transaction to a block.
Also, it would make sense for exchanges etc to buy some mining power. That would make blocks appear faster, and also they would get the mining reweards, so it might be net positive. Or just simply bribe some miners to mine the valid chain. Very easy way to do that would be just to increase the transaction fees that they put to transactions.
That's not true. The chance of finding a block is the same for every hash given a certain difficulty, regardless of competition. So a miner with a certain amount of hashing power will always have the same chance of finding a block until the difficulty changes.
The remaining miners make the same amount per day, until difficulty is adjusted, and then much more.
Consider this: one pool with 20% hash power. They only get every 5th block, i.e. 1 coinbase reward every 50 minutes.
Now all the other miners fall away. Now this pool will still take about 50 minutes to find a block, but it will get 100% of them, thus still being rewarded a block every 50 minutes.
However, 2 to 10 weeks later (depending when the last difficulty adjustment was) (or longer, if difficulty adjustment is capped), a block is found every 10 minutes again, and the pool gets 100% of them, thus 5 rewards in 50 minutes.
On the other hand, gp also said: > Also as there would be the same amount of transactions and less blocks, the blocks would have more collected transaction fees -> bigger reward.
If I understand correctly, that the hypothetical 20% mining pool would immediately get 100% rather than 20% of all transaction fees when the other miners fall away.
However, AFAIK the coinbase (mining reward) dwarfs the transaction fees (for now), so that should not be that relevant.
Then when the difficulty has fallen enough to make mining profitable and have a consistent 10 minute block time the larger hash power chain will be able to mine at a significantly faster rate on the lower hash power chain and that will make it susceptible to a %51 attack.
The only way to avoid that scenario will be for them to switch the proof-of-work or manage to get a lot more hash power back on their chain. Being on the minority chain in that situation is frankly dangerous, the value should be discounted appropriately.